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Assumptions - Anticipated Collections

Experience has taught FDA that the two-thirds of PDUFA fee revenues that come from establishment and product fees are relatively stable, and can be counted on each year. However, the remaining one-third of revenues that comes from applications has proven fairly volatile and can fluctuate widely from year to year. In two of the five years of PDUFA II, fee revenues fell below anticipated collections. Because of this volatility, it is not prudent for FDA to plan for the allocation of 100% of the application fees each year.

Therefore, in developing plans for the future, FDA will routinely count on getting 100% of the establishment and product fee revenues each year, but only 80% of the application fee revenues, as depicted in the table below:

Anticipated PDUFA III Collections

Fiscal Year

2003

2004

2005

2006

2007

Product Fees

$74,300,000

$80,287,900

$91,160,341

$97,628,935

$101,612,196

Establishment Fees

$74,300,000

$80,287,900

$91,160,341

$97,627,806

$101,611,020

Application Fees

$59,440,000

$64,230,320

$72,928,273

$78,102,245

$81,288,816

Total

$208,040,000

$224,806,120

$255,248,956

$273,358,985

$284,512,032

Revenues at this reduced level will be planned and allocated. If more than 80% of the application fee revenues are collected, and the agency assumes that will be increasingly the case in future years, the revenues will increase FDA’s carryover balances, and may support increased levels of planned expenditures in future years. This plan results in minimal carryover balances each year.

It should be noted that at the time of agreement on the substantive provisions of PDUFA III FDA envisioned sufficient resources to add about 450 additional staff years of effort over the five years of PDUFA III. However, the assumption above (that we may prudently plan on only 80% of application fee revenues each year) reduces the level of resources we may plan on, making this current plan reduce expectations to 376 additional staff years.

This strategy of planning and allocating only 80 percent of the anticipated application fee revenues each year replaces the strategy of planning a contingency reserve for each year that was used in the previous PDUFA II five-year plans.